Any currency war could put India in a tough spot
Reuters Market Eye - Finance Minister P. Chidambaram says premature to say Japan's move to weaken yen constitutes a currency war, but urged Asian countries who are looking to stem volatile inflows to avoid depreciations of their currencies.
Chidambaram's comments must be seen in the context that India needs large inflows and a stronger rupee to narrow the current account deficit and to curb inflation.
Despite QE3-led strong inflows into domestic stocks, the rupee actually saw mild depreciation in 2012, with the central bank intervening to prop up the currency.
A currency war could put India in a tough spot, not following other countries in depreciating its currency could make its exports less competitive.
But the country also can't afford a weaker currency at a time when confidence in the rupee is not particularly strong because of the twin deficits.
(Reporting by Subhadip Sircar)
- Tweet this
- Share this
- Digg this
- UPDATE 7-U.S. says Russia must pull convoy from Ukraine or face more sanctions
- U.S. strikes have slowed Iraq militants but not weakened them - Pentagon
- WHO warns of 'shadow zones' and unreported Ebola cases
- China gold exchange gains traction as yuan reforms stir interest
- Liverpool won't change attacking style says Rodgers
More than 70 percent of Indians are satisfied with the leadership of Prime Minister Narendra Modi since he took office nearly three months ago, an opinion poll showed, seeing in him the best hope to put the economy back on track. Full Article
India to hike iron ore royalty, miners may struggle to pass on extra cost. Full Article